Compulsory Workplace Pensions

Changes in The Pensions Act mean that UK employers now have a legal duty to enrol most employees into a qualifying pension scheme and contribute towards their retirement.

The dates when auto enrolment becomes compulsory vary according to the size of the workforce; the first stage started in October 2012 and the next major enrolment date is April 2014.

legislationDo you know your staging date?

If you’d like help getting to grips with the new laws, Beaufort runs workplace pension seminars throughout the year. You can register for our next seminar here or contact us for more information on 0118 9879 400 or

Answers to key questions

The seminars explain exactly what’s involved, what impact it will have on a business and how employers can put cost-effective solutions in place.


What is 'Auto-Enrolment'?

Auto enrolment is new pension legislation that automatically enrols most company employees into a qualifying pension scheme with employer contributions.

Why have compulsory workplace pensions been introduced?

People are now living longer and creating a bigger drain on public funds. The government therefore wants to encourage individuals to save for their retirement.

What is a ‘qualifying pension scheme’?

A qualifying pension scheme is one that meets the minimum standards set out by the Pension Act. Employers may choose to use the default government scheme, NEST, or their own company pension, provided it meets the minimum standards.

What is NEST?

NEST (National Employers Saving Trust) is the government default auto enrolment pension scheme.

Do companies have to use the NEST scheme?

Companies are not obliged to enrol employees onto NEST (National Employers Saving Trust). They can choose to enrol employees onto their own qualifying pension schemes, providing they meet the minimum standards.

Who is eligible for auto enrolment?

Every employee between the age of 22 and the state pension age, earning at least £9,440 and not already in a pension scheme meeting minimum standards is eligible for enrolment. However, once enrolled, employees can opt out.

When does auto enrolment come into force?

The date by which a company must have workplace pensions fully in place varies according to the number of employees. The largest employers (those with a workforce of 3,000 or more) started auto enrolment in October 2012.

What are employers obliged to do under auto enrolment?

Employers are obliged to provide a qualifying pension scheme, ensure eligible employees are enrolled and pay the minimum contribution for those employees.

How much will auto enrolment cost employers?

The total contribution for an individual employee is paid by the employee, employer and HMRC in the form of tax relief. For some employers, from October 2012, it will start at 3% of band earnings (band earnings currently ranging from £5,715 to £38,185) but will eventually rise to 8% from October 2017 onwards.

Is there anything companies can do to reduce the costs?

They can consider the definition of ‘qualifying earnings’ by also including variable elements such as bonus, overtime and commission payments. If, for example, you have employees with lots of variable earnings, overtime or bonuses, 8% of basic pay may be less than 8% of earnings. One solution may be for employers to consider reviewing their total remuneration package to absorb the extra costs and looking at methods such as salary sacrifice as a cost-effective way of increasing pension contributions.